I am Director of the Center for the Study of Science at the Cato Institute and a senior fellow in research and economic development at George Mason University.
My writing has been published in major scientific journals, including Climate Research, Climatic Change, Geophysical Research Letters, Journal of Climate, Nature and Science, as well as publications like the Washington Post, Washington Times, Los Angeles Times, USA Today, Houston Chronicle and Journal of Commerce. I have a Ph.D. in ecological climatology from the University of Wisconsin at Madison.

Maybe It Should Be Called the Chevrolet 'Vote'

The Chevrolet Volt is everything that is wrong with Washington on four wheels, and investors (that’s you and me) should be furious.

Wrong #1: The Volt should be re-named the Vote. Who can forget that Super Bowl ad, with the pseudo-assembly line of Volts rolling through Hamtramck, Michigan, and the voice overlay that “this isn’t the car we wanted to build; it’s the car America had to build…from the heart of Detroit to the help [sic] of the country.” How true—corporate welfare on wheels, buying votes in a state vital to the President’s re-election. There is simply no way that GM can kill it.

Wrong #2: Paying workers for not working. Several days before Christmas, production was phased out for the holidays, which in the case of the Volt plant, lasted until February 6. Last Friday, GM announced another shutdown, from March 19 through April 13, or five weeks. That’s right: the Hamtramck plant will produce “the car America had to build” for less than seven out of 18 weeks. When it’s open the plant only runs one ten-hour shift for four days a week. When the plant is shuttered, the 1,300 workers still get paid. Not counting obligations to retirement, the average hourly wage and benefits cost to GM union employees is about $55 per hour. Shareholders ponied up a little more than $30 million in wage costs alone for these 11 weeks of leisure. Nice job if you can get it! Of course, institutional overhead probably tacks on another $15 million or so. All while not one car is produced.

How many unsold Volts are out there? GM says there were 3,600 at the end of February, and Autoweek and The Wall Street Journal say 6,300 (which would be in the ball park of the total non-fleet sales of Volts for all of 2011). Cars.com lists a bit over 4,300. Even using conservative figures, the average Volt sits on the average dealer’s lot for 60 days.

Wrong #3: Subsidizing well-off taxpayers. The Administration is doing everything it can to goose sales. The President’s new budget raises the subsidy paid to Volt buyers another 33%, to $10,000 per car in a direct tax credit. The median price of all the Volts on cars.com is $43,200. The average household income of Volt purchasers is in excess of $170,000, around the 93rd percentile. At the 28% tax bracket (married, filing jointly), this is equivalent to $36,000 of tax-free income. The car which is traded most for the Volt is none other than the Toyota Prius, which, according to most analyses, will not have been owned long enough to save in gas money the total premium paid for the car, compared to a comparable conventional vehicle.

Wrong #4: Corporate cronyism and coercion. Last month, General Electric, whose CEO Jeffrey Immelt chairs the President’s Council on Jobs and Competitiveness, announced that all 2012 sedans ordered by employees for corporate use will be Volts. That’s Competitive! Beginning next January 1, GE will not reimburse employees for any corporate travel unless it is done in a Volt. If GE purchases the 12,000 Volts it is committed to buying, it will get a $120 million subsidy.

Mark Modica, of the National Center for Policy Analysis, has uncovered another whopper. Dealers that sell Volts to nonprofits, such as municipalities, can claim the subsidy. The Obama Administration is simply determined to give away money to move this car that so few want.

The political calculus on the Volt may in fact be wrong. Yes, it may deliver Michigan. But people in other battleground states aren’t happy about subsidizing a car with their children’s (and grandchildren’s) future wages.

When testifying to Congress about the (overhyped) Volt battery fires last January, GM CEO Dan Ackerson lamented “We did not develop the Chevy Volt to be a political punching bag”, but rather “We engineered the Volt to be a technological wonder”.

In fact, it is an impressive piece of technology. It is also an expensive one for which the shareholders (us) are paying workers not to work, buying the vote in Michigan, subsidizing the wealthy and paying one of the richest corporations in the world to be subsidized to buy something that just cannot roll on its own four wheels.

How could the more-aptly named Chevrolet Vote not become a political punching bag?

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Sadly for your argument, America was not built by incompetent and inexperienced politicians ordering, for political reasons, the building by government-run companies of products that few people want or can afford and which make no economic sense.

I respectfully disagree with your aforementioned points and offer a different way of looking at the Volt.

Wrong #1: The Volt was conceived, designed and green lighted long before President Obama took office. The government actually wanted to kill the Volt as part of the bail out but GM insisted that they build it. The people will always vote for a government that they feel supports their interests. In this case, it is having a job and being able to pay for things like food and housing. So yes, I imagine that the people of Michigan would be pleased that Detroit is still motor city and support the leaders who believed in them. I suppose you agree with Mr. Romney and his opinion that we should have let Detroit die?

Wrong #2: Can you please cite your source as to the laid off workers still being paid while the plant is shut down for 5 weeks. From what I can see 1,300 workers will be laid off for 5 weeks and then return to work on April 23rd. I can’t find anything showing that they are still getting paid.

It is standard procedure to halt production of cars if demand does not meet supply. The Cruz was halted for two weeks and was Gm’s best selling car last year.

A number of things have contributed to sales of the Volt being lower than anticipated, including (as you put it) an ‘overhyped’ investigation into the battery fires last year and an undying thirst on the right to attack a car that has received rave reviews from owners and the auto industry. The politics of an election year have allowed the enemies of the present administration to heap symbolism onto a car that never asked for it, and continue to disregard actual facts that support this amazing American vehicle in favor of any slander that could possible besmirch it. The largest contributor to slow sails has been price, especially for something different like the electric car during economic tough times. The Volt is cutting edge technology, and as such it is more expensive than the average car. However, like mobile phones and flat screen TV’s, this new technology will become cheaper and more widespread if given the opportunity to succeed.

Wrong #3: What interest does the government have in trying to promote a car like the Volt? Why should they spend our tax money to encourage people to buy this car? Americans consume a lot of oil, and most of that oil is imported. It is in the nations best interest to become more self sufficient. Cars like the Volt use a lot less gas than an average gasoline vehicle. With prices up, using less fuel is good for the people, but not so good for oil millionaires. If I were an oil millionaire, I would not want the Volt to succeed and would spend a lot of money to discourage its adoption. I would pay an institute to discredit the Volt and ensure that their Reports and Op Eds made it into circulation.

It is easy to show that if a multi millionaire like Jay Leno and an average person buy Volts that the average income is going to be rather high. As you pointed out, there have only been a few thousand sales during the first year, many by wealthy individuals. These people can buy any car they want but instead they chose a Volt… you could even say they Voted for it with their own money. The people who bought these first, more expensive Volts are not buying them to save money… they are buying them because they don’t want to see their money go to countries like Saudi Arabia and Venezuela. They want a vehicle that is built here in the United States by American workers and one that runs on American power.

Wrong #4 It is true that GE is buying a large number of Volts… and a large number of other electric vehicles as well. 25,000 total electric vehicles, with only 12,000 to be Volts. This may have something to do with the word “Electric” in their name and their interest in switching people from petroleum to electric transportation. GE manufactures the WattStation EV charger for public and home use. GE stands to make a lot of money if transportation becomes electric based. It is only good business to lead the way and ensure that this new technology takes root.

Given the technology, the Volt is actually a great deal. Every major manufacturer on the planet is clamoring to make either a plug in or extended range electric vehicle (like the Volt). This includes Toyota, Ford, Nissan, Honda, BMW, VW and Mazda. They are in the business of making money and they are afraid of falling behind GM. They would not bother if they didn’t think they were going to make a buck in the end.

Wrong #5: You offer no alternatives as to what we should have done to address the issues at hand. Please excuse me if I don’t join you in cheering for America to fail.

If I get a Volt in Denver; and if dealer will bargain from $41K to about $38K and I claim tax rebates: Fed of $7500, and Colorado $6000, my final out lay will be $24.5K; or less than a well equipped Prius. If my daily driving is mostly within 35-40 miles, which it should be, and my current electricity prices remain steady; I could save gasoline @ about 660 gallons/10K miles as my current car gets a steady 15.3 MPG. Using $4/gal average price that saves buying over $2600 in gas purchases for each 10K miles I will drive; or about $9360 a warranty 36K miles. Electricity should cost $1.75/gallon equivalent per local utility estimates. GM financing or credit union which offers 3/4% off for Volts at close to 3% APR is not to sneeze at either. Resell values are unknown, as are regular maintenance costs; assume that battery life should last beyond basic 3yr/36K warranty provided. Oil changes, brakes, exhaust system, water pumps etc. should last longer if one keeps a Volt for years beyond warranty. I would really prefer a CTS-V with 556 HP, but I cannot afford purchase price or fuel costs. Yes, those tax rebates might just induce me to get one.

What is the lifetime of the battery in miles? How does that compare to your standard gasoline-powered car?

Are you also willing to pay for your portion of the Superfund site necessary to serve as the graveyard for all the discarded batteries at the end of their useful life? Or are you willing to put the cost of this externality on the public at large?

What region of the country do you live in? In cold climates, the 35-40 mile range can be as little as half that (especially as the batteries age). You’ll still be able to get to your destination, but you’ll be using the gasoline engine which kind of defeats the purpose.

I really don’t know the answers to these all of these questions, but they should factor into your research and decision making process.

$13,500 in taxpayer subsidies to buy a Volt? A Cruze costs $14,000 you know. If you bought one of those, you would have saved us taxpayers $13,500, and yourself an additional $16,000. And you would have gotten a much better car.

Maybe you don’t usually follow politics or news on a regular basis, and hence you didn’t realize this. But those tax credits you are so worked up about where created and structured by the Bush administration.